Dell Technologies’ shares surged nearly 11% on Wednesday after the company raised its annual revenue and profit forecasts, driven by strong demand for its AI-optimized servers.
Companies involved in AI infrastructure have benefited from the growing demand as technology firms and hyperscalers increase data-centre investments to support large language models and other artificial intelligence applications. Rival Super Micro Computer also reported strong results last month.
“The AI momentum spoke for itself,” J.P. Morgan analysts said, highlighting Dell’s record $60 billion in orders and a $95 billion backlog during the quarter.
Dell’s servers, which are powered by Nvidia chips, are in demand among customers such as AI cloud providers Nscale and CoreWeave, which use the systems to build computing clusters for training and running AI models.
Melius Research analysts said strength in Dell’s storage business was also contributing to its performance and appeared sustainable, with AI generating fundamental growth in the company’s most profitable operations.
The brokerage increased its price target for Dell to $735, the highest among analysts tracked by LSEG.
Dell lifted its full-year revenue forecast to $192 billion from its earlier projection of $167 billion. It also raised its adjusted earnings-per-share target to $25.50 from $17.90.
The company’s second-quarter revenue jumped 58% to a record $47 billion, comfortably exceeding Wall Street’s estimate of $44.92 billion.
Following Dell’s results, shares of other AI server manufacturers also gained, with Super Micro Computer rising 2.2% and Hewlett Packard Enterprise climbing 1.4%.
If Dell’s gains hold at the current share price of $461, the company is expected to add approximately $23.26 billion to its market value.
According to LSEG data, Dell’s shares were trading at 18.12 times projected earnings for the next 12 months. By comparison, Hewlett Packard Enterprise and Super Micro Computer were trading at multiples of 12.56 and 8.06, respectively.
